Out of Bounds

hen the Denver Nuggets trot onto the hardwood floors at the Pepsi Center on November 2 to open the season against the Phoenix Suns, team owner Donald Sturm will be on the edge of his seat.

The newly built, $165 million arena will have already hosted its first blockbuster concert and several Colorado Avalanche games by then, but the dismal Nuggets are still "rebuilding." And Sturm, who bought the Nuggets, the Avalanche and the Pepsi Center on July 27, will be wondering if he put the right players on the court -- Ron Mercer from the Celtics, Nick Van Exel, who re-signed for $55 million, Antonio McDyess and Chauncey Billups.

Sturm probably won't give much thought to the hundreds of security guards, ushers, janitors, stagehands, electricians and other behind-the-scenes employees who will run the show.

But Cory Meredith, Rick Larson and Scott McDowell will.

The three men bid for -- and lost -- what would have been stable and lucrative contracts with the Pepsi Center: Meredith for Staff Pro Inc., a security company; Larson for Bear Communications, which provides wireless two-way communications; and McDowell for Rocky Mountain Stagehands, which hires people to build and dismantle entertainment and sporting sets.

Unlike Sturm's high offer of $461 million, Meredith, Larson and McDowell were aiming low to try to win their bids. All three, however, claim that their bids weren't fairly evaluated and that the final contracts were awarded in irregular or inappropriate ways. Even if Sturm did choose the right players for the basketball court, they say, the people who now work for him chose the wrong players for the Pepsi Center.

"It concerned us that the bid process did not seem fair," wrote Staff Pro CEO Meredith in a June 9 letter to Barry Fey, the former Denver music mogul and a current consultant for the Pepsi Center. "Especially that the contract was awarded on the basis of friendship rather than ability."

In this letter and an earlier one addressed to Pepsi Center senior vice president Gene Felling, Meredith accused Felling of choosing D&L Entertainment Services over Staff Pro based solely on Felling's friendship with D&L vice president Tom Smith. Smith works at Fiddler's Green Amphitheatre, where Felling was the general manager for ten years until April, when he took the Pepsi Center job. Felling contracted with Smith's D&L to provide security for Pope John Paul II's visit to Denver in August 1993 as well.

Meredith also pointed out that San Diego-based Staff Pro works at almost every major arena and venue in the western United States, while D&L has only one arena contract, at Reunion Arena, in the company's hometown of Dallas -- and he included a letter from the president and CEO of Reunion Arena, who recommended Staff Pro over D&L.

Reached at his San Diego office, Meredith is more diplomatic. "This will be over a million dollars in gross billing a year," he says. "It will be a very busy building. It's a big contract. I've known Gene for twenty-some years. I told him not to [hire D&L]. But they are a private company. They aren't held to the same guidelines that a state or city facility would be under. They can choose who they want for any reason."

Larson, a sales manager for the Denver field office of Dallas-based Bear Communications, raises similar issues; he claims that arena production director Shawn Stokes chose Frontier Communications over BearCom based on Stokes's friendship with someone at Frontier.

"It was obvious Stokes was looking for any and all excuses to not give me the business," Larson says. "He was incredibly rude and he kept bringing up rinky-dink issues. Finally I asked him what he was going to base the decision on. I wanted him to say price because I was prepared basically to give him the radios at cost.

"But a few days later he said he had decided to go with my competitor. I learned he [Stokes] had a best friend or a friend working for [Frontier]. He said he was going to give the business to his friend and then he got very offensive. It was very strange how the whole thing played out."

Larson told Fey that Bear had already done quite a bit of legwork for the Pepsi Center -- all for free. Larson had ordered $6,000 worth of radio equipment, helped the arena obtain FCC licensing and planned to demonstrate everything in mid-June when he found out he had lost the contract.

"It's not illegal, and there is nothing that I can do at this point, but I would have handled it differently myself. I had, like, twenty meetings with these people, I was down there all the time. This guy had no feelings for all that work," Larson says. "He told me to come down and pick up the radios. It really seems like that whole deal down there is going to be snakebitten."

Larson estimates that the contract would have been worth about $100,000 initially, with an additional $30,000 made in the following years.

"I got a letter from the people at Bear. Why me, I don't know," Fey acknowledges. "I did some investigation, and [Stokes] told me that Bear was underbid by, like, thirty or forty thousand."

But Fey won't comment on Staff Pro's complaint or any of the other details involved in the bidding process.

Employees of the third disgruntled company, Rocky Mountain Stagehands, are talking about picketing the Pepsi Center, says company president Scott McDowell. "I'm not sure if a decision has been made on that, though," he cautions, "or if it's the right thing to do."

Rocky Mountain Stagehands, which primarily hires members of the International Alliance of Theatrical Stage Employees union, made a number of concessions to win the job, McDowell says. The company lowered its bid when McDowell found out that it came in high, and the union members agreed to work without some of their usual contract demands.

"Apparently we still came in 17 percent higher than the bidder that they took," he says. "What we had to offer would easily have justified that 17 percent. If we were that close, it seems that the local flavor should have put us over -- we were definitely disappointed."

The contract was awarded to Phoenix-based Rhino Staging, and the Pepsi Center has been encouraging IATSE members who work for Rocky Mountain Stagehands to apply there, according to one source. "Felling is carrying anti-union sentiments from Fiddler's Green, which was non-union," the source says. "He hasn't acted in the best interest of the Pepsi Center with any of these contracts. He is taking a beautiful building and turning it into an outhouse. Neil Diamond will notice it. Celine Dion will notice it." (The two singers have announced tour dates at the Pepsi Center later this year.)

Scheduled to open on October 1 with the Dion show, the 19,000-seat Pepsi Center will replace the aging McNichols Arena. Designed to hold 150 to 200 events every year, the Pepsi Center sits on 52 acres in the Platte Valley next to Six Flags Elitch Gardens.

Sturm, a Denver billionaire, owns the Sturm Group investment company and is involved in the real-estate and telecommunications industries. New to the sports business, he bought the two teams and the arena from Ascent Entertainment Group last month. With a $461 million offer, he was the biggest billionaire on the block, beating out Bill and Nancy Laurie -- heirs to part of the Wal-Mart fortune -- and other potential buyers.

James Taylor, who represents Local 7 of the IATSE and supports Rocky Mountain Stagehands, says he doesn't blame Sturm for the decision-making process because he just bought the teams. But, he adds, "we are attempting to do what we can to win our position back and talk to Mr. Sturm and so forth. I understand it was completely Gene Felling's decision" to hire Rhino.

Felling is hesitant to talk to Westword about the bidding process or the final contracts, saying that the policy of the Pepsi Center operation is not to discuss private business decisions. But he says that contracts with the Pepsi Center -- dozens of which have been signed in the last four years -- are not always awarded to the lowest bidder. "In some cases they were and some they weren't," he says. "All the bidding was completely fair. We did what was best for the Pepsi Center."

Felling also defends himself and Stokes against the claims made by Meredith, Larson and McDowell. "All the allegations are totally and completely untrue and false," he says.

In the coming weeks, IATSE and Rocky Mountain Stagehands plan to take their case to Mayor Wellington Webb and the members of the Denver City Council; Taylor and McDowell want them to know that a local company was passed over in favor of an out-of-state outfit.

But the only view that Meredith or Larson will have of the inside of the Pepsi Center will be as paying customers or on TV. "Yeah," Larson says with a chuckle. "We didn't even get any free tickets out of them."

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Jonathan Shikes is a Denver native who writes about business and beer for Westword.
Contact: Jonathan Shikes

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